20/20 vision

Timely insights from portfolio managers and industry experts on key financial, economic and political issues.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness.

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      By Yana S. Barton, CFACo-Director of Growth Equity, Eaton Vance Management and Lewis R. PiantedosiCo-Director of Growth Equity, Eaton Vance Management

      Boston - 20/20 vision is a term used to express normal visual acuity, the clarity or sharpness of eyesight measured at a distance of 20 feet. One can't help but think of parallels to investors seeking "perfect" vision as we enter 2020, the first year of a new decade.

      The irony, of course, is that unlike eyesight vision, which excels in "shorter distance," we find that the better investments tend to excel at "longer distance" — that is, when given a longer time horizon.

      Forecasting fables

      Forecasting is not easy. December marks the customary time of the year when strategists and analysts alike make projections for the year ahead and review the year past: 2019 baffled many of these "experts." Who would have thought a year marred by tariff disputes, a global slowdown, recession worries, geopolitical tensions and no earnings growth would yield a record total return of 29% for the S&P 500 Index?1

      As we enter 2020, the list of unknowns seems to be just as long as it was exactly a year ago, with the added uncertainty of the U.S. presidential election and continued geopolitical strains.

      Time is money

      There's a plethora of financial investment valuation models to assess the value of a security. But no matter which method is used, a key input is time. Historical experience suggests that the longer you look out, the clearer the picture gets, as evidenced by the table below.


      Source: Ned Davis Research. Illustrates the historical probability of a gain in total return of the S&P 500 Index. See disclosures for additional information. Past performance is not a reliable indicator of future results.

      While the odds of building wealth in equities are good in any given year, we believe that the longer your time period, the greater your odds of success can be.

      Bottom line: Investing is not a game of perfect vision, but we aim to increase the odds of success by focusing on the long term.